Wednesday, November 14, 2018

Watchlist Update: November 14th, 2018

Market Pulse.

The stock market is threatening to finally enter a bearish stage, judging by the movement of SPX that, technically, fell again under the SMA200 and struggles to overcome it. We mentioned that its monthly chart closing under the SMA10 was a bad sign, and now the usual Christmas mini-rally is in danger of not being made. Some notes:

- The Trade War makes Wall Street move according to its rumors, news and subsequent denials. Now, it seems that Trump and Xi could meet on November 30 at the G20 Summit.

- The VIX volatility reached the psychological value of 20, after many indecisive sessions.

- The dollar remains very strong against all its peers, but today's inflation flat data can generate more pressure to the FED about a Rate Hike in December.

- On the other hand, the apparent tranquility of the 10-year T-Bond yield TNX at the 3.15% level and the collapse in the price of oil /CL (12th. straight sessions of declines, and today falling 6%), can help the market in the mid-term.

Comparison between sectors

This comparison chart shows the performance of the nine main sectors during 2018. Shadow in blue sky is the SPX, the benchmark. As we see, since early October, the default three defensive sectors (Staples $XLP, Health $XLVand Utilities $XLU) still leading the market, signing a clear downtrend, confirm by the Sector Rotation Model above, in red.

Apple Inc. AAPL, $192.595

Apple today at a crucial moment when trying to bounce in its SMA200 after 6 months over this. A "buy the dip" trade or wait for the rebound: that's the dilemma. Meanwhile, the bear signals continue strong in the MACD, but now an excessive overbought in its Stochastic can mean a rebound. Good time to trade options or spreads as implied volatility is below historical data. AAPL, with their fundamental problems as the sale of their iphones and excessive buybacks, is likely a short in the short-term.

Nvdia Corp. NVDA, $203.06

NVDA is one of my favorite stock, only for speculate, with a day-trade. Always its good volume and volatility above 60%, guarantees good daily movements, but requires constant vigilance. This week several entry points (that usually happens in the first half-hour of the session) were given using the ADX-Ichimoku strategy reviewed in a previous post. Using levels of support or resistance from the previous day and verifying the required price and chart conditions (breakout, above/below the cloud, ADX>20 and Tenkan exit), fast profits can be obtained. The ADX-Ichimoku, as all, not infallible, but good strategy in days of choppy markets. Remember in Thrusday, Nvdia reports Q3 earnings, that likely will define its route in the mid-term.